An IMF mission, led by Mission Chief Nathan Porter, has commenced discussions with Pakistan’s Finance Ministry regarding a new loan program and the upcoming budget for the new financial year.
Finance Minister Muhammad Aurangzeb is heading Pakistan’s economic team in these talks. The consultations, scheduled to last around two weeks, will cover both the new loan program and the budget.
Pakistan anticipates a significant bailout package exceeding $6 billion from the IMF to strengthen its economy and tackle urgent fiscal issues. Sources indicate that the Finance Ministry’s economic team has meticulously prepared for the negotiations, ensuring all essential groundwork is laid for productive discussions.
Key agenda items include discussions on the Extended Fund Facility loan program, for which the finance ministry has prepared a comprehensive working paper. Additionally, the two dozen-member IMF mission will engage in consultations regarding the formulation of the national budget for the upcoming financial year.
On Sunday, the IMF’s resident representative in Pakistan, Esther Perez Ruiz, confirmed that a mission of the Fund would hold talks with Pakistani officials on a new loan program next week. Ruiz stated that the purpose of the negotiations is to establish a foundation for improved and stronger governance. She added that the parties would also discuss sustainable economic development, benefiting all Pakistanis.
Also on Sunday, Finance Minister Muhammad Aurangzeb asserted that the government would provide all necessary facilities but would not retreat from expanding the tax net.
“We are transitioning towards complete digitalization, which will enhance revenues and promote transparency,” he further stated. Addressing a pre-budget conference in Lahore, the minister emphasized the need for structural reforms, particularly in areas concerning tax-to-GDP ratio, energy, and privatization.
The International Monetary Fund has also expressed concerns over ongoing political uncertainty in Pakistan following the February 8 elections, highlighting potential implications for economic reforms. Despite the formation of a new government, the IMF has underscored challenges in implementing policy reforms amidst a complex political landscape.
According to the IMF, the new government has committed to upholding policies outlined in the standby arrangement. However, the IMF cautioned that complications arising from political instability, inflation, and social tensions could impede reform implementation.
